RBNZ adds yuan to NZ dollar index, slashes US dollar weighting

Pedestrians walk past the Reserve Bank of New Zealand headquarters in Wellington, New Zealand, on Thursday, Sept. 13, 2012.

The Reserve Bank of New Zealand on Monday announced changes in the way it calculates the domestic currency's trade-weighted value to better reflect its growing trading ties with China, while cutting the share of U.S. dollars, euros and yen.

As of Wednesday, the Australian dollar will comprise 21.98 percent of the index, the largest proportion and rising from 21.61 percent now, while the Chinese yuan will be added to make up 20.09 percent.

The increase in the Australian dollar's weighting and the inclusion of the yuan reflect the impact that the values of those currencies have on the "kiwi" dollar given that Australia and China are New Zealand's two largest trading partners.

The U.S. dollar, which currently accounts for 31.71 percent of the index, will see its weighting cut to 12.34 percent this week while the euro component will fall to 10.87 percent from 26.85 percent.

The British pound and the yen will also see their weightings reduced to make room for the currencies of Singapore, South Korea, Malaysia and nine other mainly Asian units, highlighting the South Pacific island nation's trading ties with Asia.